Panicked buyers in Toronto’s Trump International Hotel and Tower have run out of options.

Developer Talon International Inc. announced Tuesday that buyers have until Dec. 13 to come up with final payments on pricey hotel-condo units, now that the Ontario Securities Commission has decided it won’t take regulatory action against the developer.

Tuesday’s developments leave many buyers in a horrible Catch-22 — owing an average of more than $500,000 each on hotel-condo units that are costing them thousands of dollars per month to keep, and unable to get conventional financing from banks that are taking the view the units are commercial ventures rather than real estate investments.

“That could mean you’re going to see buyers just walk away. We haven’t seen that in a while — since the (real estate bust of the) 1980s,” said mortgage broker Steve Garganis.

“These are very specialized projects. They aren’t like conventional condos and lenders generally consider them risky. You have to have deep pockets if you are going to get involved in something like this.”

One buyer who was interviewed by OSC staff as part of their probe of Talon’s sales tactics, said he was “shocked” by Tuesday’s announcement from the commission that “we have determined not to pursue regulatory action.”

“I’m extremely disappointed,” said the buyer, a blue-collar worker who borrowed the $175,000 down payment from his immigrant parents and has run out of money to cover the thousands of dollars per month in maintenance fees and taxes.

Like about a dozen investors who have spoken to the Star, he’s been trying to renege on his deal and had hoped the OSC would step in after he, and at least two other investors, provided marketing materials used by Talon which set out rosy projections for what buyers stood to make as part of the hotel’s rental pool.

The OSC had issued explicit instructions to Talon back in May 2004 that the units not be marketed as cash-generating investments.

The OSC declined to comment on its decision.

About eight investors who have already filed multi-million lawsuits against Donald Trump, Talon and it’s principals, claiming they are “victims of an investment scheme and conspiracy” have no intention of closing on Dec. 13 and will await their day in court, said their lawyer, Javad Heydary.

But he acknowledged the cases could take two to four years to be settled.

Talon declined to say if it’s considering vendor financing to help those buyers who are being refused mortgages.

More on thestar.com

We value respectful and thoughtful discussion. Readers are encouraged to flag comments that fail to meet the standards outlined in our
Community Code of Conduct.
For further information, including our legal guidelines, please see our full website
Terms and Conditions.